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Analyst keeps Bally Technologies as top pick

By Associated Press
June 26, 2009 | Comments (0)

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A Morgan Joseph analyst said Friday that Bally Technologies Inc. remains his top pick, saying that the slot machine maker's stock is undervalued.

Analyst Justin Sebastiano said in a client note that the multiple discrepancy between Bally's stock price and those of rivals such as WMS Industries Inc. is not justified "given the recurring revenue and high-margin nature of the company's systems business."

The analyst also expects Bally to benefit when casino operators decide to replace some of their machines. While the recession lingers, Sebastiano predicts 2010 budgets will be higher than last year's, giving room for more machines to be cycled out.

"We believe Bally will receive a disproportionate share of the replacements as these machines are swapped out over time for newer ones," he wrote.

Sebastiano reiterated the Las Vegas-based company's "Buy" rating and $34 price target.

Bally's stock shed 30 cents to $25.44 in morning trading.

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